The Eurozone banks should not pay for the ‘Frankfurter Folly’ (2 pictures)
from Merijn Knibbe
1. Mario Draghi is XXX-smart.
2. And he participates in the present negotiations about conferring more supervisory tasks power on the ECB
2. No doubt, the next sentence in paragraph 4.5.1 of the “Proposal for a
COUNCIL REGULATION conferring specific tasks on the European Central Bank concerning policies relating to
the prudential supervision of credit institutions” will not have escaped his attention:
Expenditures relating to the ECB’s supervisory tasks will be financed by charging fees from supervised institutions.
Hmm. Which expenditures? The ECB of course at present has some financial problems with their new building, which was designed for about 2500 people. But, as the Euro is not the success/is a much larger disaster that/than was expected, much less countries will adopt the Euro. And much fewer people will therefore use this building. Next to this, it is severely over budget and has been to ‘grandiose’ from the beginning (check the virtual tour: what a lot of air). Which means that the new ECB supervisory tasks which by now are (almost) endowed upon the ECB come in handy. The superfluous second tower of the Frankfurter Folly can be used after all. And the costs can even be charged to the European banks!
However,
- as the ECB is in a monopoly position, as these housing costs are partly due to over-optimistic budgeting and lousy cost control (200 million additional costs of building materials – are these steel beams gold plated?), as the ECB is one of the prime advocates of austerity and especially as it is sound micro economic thinking, the ‘folly costs’-part of total costs should not be charged to the supervised banks
- So, Joerg Asmussen, the man in charge, should lead, take a loss of about 300 millions on the building and cover these costs by cutting ECB salaries (about ten years -15.000,– p.p.). What’s good enough for Spain is no doubt good enough for the ECB (Well no, of course. On a national scale, cutting wages means that the ‘quadruple accounting’ identities kick in (my expenditures are your income) and economists have to take account of this. But it is good enough for the ECB).
Draghi of course understands all this.
Fun fact: the previous guy in charge. Lucas Papademos…
And I can’t resist this (2 pictures):
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